A good friend of mine from my MBA program just emailed me a link to a Goldman Sachs report that was quite compelling. The report covers the economic growth potential, over the next 50 years, of Brazil, Russia, India and China (the “BRICs economies”), and should be viewed by anyone interested in investing.
I personally found the report quite powerful for several reasons. First, I enjoy following markets and economic trends (not enough to be good at it), particularly ones that I am invested in. Second, the report paints a fairly good picture of what the world economic makeup will look like over the next 50 years, which could potentially impact (positively or negatively) the environment, business norms, consumption habits, and more.
For instance, as the BRICs economies continue to grow and consume sources of energy, prices will rise (great for investors but not so optimal for consumers) and resources will become more scarce. In such a scenario there is just as much opportunity to capitalize on the scarcity as there is to develop alternatives. It is the development of alternatives that I am most interested in watching over the next fifty years.
Here are a few additional observations I had while viewing the report:
- BRICs, if the report is correct, will define the future of business far more than they do now. Doesn’t mean US, Japan and current other economic powerhouses will fade away or dramatically lose influence, but that more players will be present at the table. This could be equally positive and negative.
- The car purchasing statistics were quite interesting in that they showed a massive percentage of ownership sitting in the BRICs economies. Since such high growth in ownership is expected, there is a huge opportunity to create a more sustainable and environmentally friendly auto footprint. At the same time, there is also the potential for the growth to go in the other direction, adding to the already large environmental and natural resource issues we are experiencing.
- The energy and oil demand does not seem that extreme but still raises many important questions about the future of our environment in direct correlation to increased growth.
- From an investing standpoint, pay particular attention to the information on energy and commodities, as well as the potential appreciation of the BRICs economies’ currencies.